:00:09. > :00:17.Thank you. Good afternoon. George Osborne House laid out his
:00:17. > :00:23.suspending envelope. More than 11.5 in -- 11.5 William pounds in cuts.
:00:23. > :00:32.We will hear what is in store for the Scottish Finance Secretary and
:00:32. > :00:41.get the political reaction from Holyrood. -- 11.5 billion pounds.
:00:41. > :00:44.Here at Westminster we chew over the Chancellor's handiwork.
:00:44. > :00:51.With me for the next hour in the studio is our political commentator
:00:51. > :00:58.Albert Young and our dismiss and economy editor. Welcome to you both.
:00:59. > :01:02.Alf, what is your reaction? I think a lot of that was trailed in
:01:02. > :01:10.advance, we knew the global number and which department was going to be
:01:10. > :01:14.hit and which would be ring fenced. The bit at the end about the further
:01:14. > :01:19.attack on welfare benefits for those who lose work, and more particularly
:01:19. > :01:24.the idea that in the civil service, at not just here, in the health
:01:24. > :01:30.service, in schools, in prisons and in the police service there will not
:01:30. > :01:38.be any more progression pay. If that is going to happen here in Scotland,
:01:39. > :01:45.there will be a row about that. have been trying to crunch the
:01:45. > :01:51.numbers for Scotland, Douglas. How is it looking? The bits that are
:01:51. > :01:57.used to keep services turning over of nearly 2%, that is applied
:01:57. > :02:02.through the Barnett formula. This year we are talking about, 2015,
:02:02. > :02:08.2016 is down the road, we are looking at 27.5 billion pounds of
:02:08. > :02:13.money available. It is a cut of nearly 2%. The capital budget is
:02:13. > :02:17.increasing quite substantially. 13% and part of that is because there
:02:17. > :02:24.are new powers coming in through the Scotland Act with additional powers
:02:24. > :02:27.coming into Scotland. The Barnett formula takes all the different
:02:27. > :02:32.departmental spending decisions and applies them so local government
:02:32. > :02:38.gets clobbered again. There is a consequential effect on the budget
:02:38. > :02:40.for Scotland. There really the thing that Holyrood spends on, that is
:02:41. > :02:49.health and schools, or ring fenced and largely protected, but only
:02:49. > :02:55.just. Is a little bit of shipping away. Overall, the Scottish budget
:02:55. > :03:02.is yet to be distributed, but that is less bad than we have seen.
:03:02. > :03:09.Fashion mag chipping away. -- chipping away. There are a
:03:09. > :03:17.unorthodox means of getting the budget and progression awards in
:03:17. > :03:22.focus here. The NHS is so big, �110 billion being spent according to
:03:22. > :03:27.today's figures, the effect of protecting all of that means if you
:03:27. > :03:30.have to apply cuts as the government must, then you must apply them are
:03:30. > :03:37.severely elsewhere. That includes local government. What they are
:03:37. > :03:42.talking about for England does not apply here in Scotland yet. It makes
:03:42. > :03:45.a lot of sense in terms of delivery of the services for people who can
:03:45. > :03:51.get stuck between the two systems. We have been talking about it for
:03:51. > :03:55.years. In financial terms, it is significant that the health budget
:03:55. > :04:00.may be getting a little shaved off at the edges in order to help other
:04:00. > :04:08.departments that are suffering. Thank you all stop let us get a
:04:08. > :04:11.straight to some of the reaction here in Scotland. We can speak to
:04:11. > :04:21.the Finance Secretary John Sweeney who has been busy day jesting the
:04:21. > :04:25.
:04:25. > :04:30.figures. -- busy day jesting. -- busy assimilating. What are the top
:04:30. > :04:36.line for Scotland? It demonstrates a further reduction in the operating
:04:36. > :04:41.expenditure of the Scottish Government. We have seen that
:04:41. > :04:46.reduced in 2015, 2016. The capital budget is largely flat on the
:04:46. > :04:49.position at the end of 2014, 2015. The UK government is putting in
:04:49. > :04:54.place additional financial measures including robbing that we knew was
:04:54. > :05:00.coming. It will have to be paid back either Scottish Government were we
:05:00. > :05:02.to use these facilities. The Chancellor has set out a clear
:05:02. > :05:10.roadmap of further reductions in public expenditure that will go all
:05:10. > :05:14.the way through to 2017, 2018 and it demonstrates that the power of the
:05:14. > :05:17.United Kingdom is on is one of austerity and budget reduction. It
:05:17. > :05:24.Scotland stays part of the United Kingdom that is exactly what we will
:05:24. > :05:28.get. The Chancellor was clear about the reasons for austerity. He
:05:28. > :05:35.pointed out some departments are being cut by 10% but Scotland is
:05:35. > :05:45.having a 2% cut, so we are getting off relatively lately? That is
:05:45. > :05:45.
:05:45. > :05:50.related to the Barnett formula. Let us not be in any way deceived by
:05:50. > :05:54.this. It represents a reduction in public expenditure into 2015, 2016
:05:54. > :06:00.and that is not something that has happened in one year. We have in
:06:00. > :06:06.dealing with this since 2010, 2011. The capital budget has come down by
:06:06. > :06:11.25%, between 2010 and 2015. We have seen reductions in our operating
:06:11. > :06:15.budget by 7% over the same period. We are dealing with significantly
:06:15. > :06:21.reduced public expenditure. If the Chancellor wanted to do something
:06:21. > :06:27.about that he should have invested to expand and grow the economy. He
:06:27. > :06:31.has burrowed over 275 billion pounds more than he expected simply to did
:06:31. > :06:38.with the costs of failure within the economic policy over which he has
:06:38. > :06:43.precise and that is a terrible economic legacy. He said he had to
:06:43. > :06:53.ride the rough waves of the eurozone crisis and the rising oil prices. He
:06:53. > :06:53.
:06:53. > :06:56.said he was trying to inject growth into the economy. In 2015, 20 62,
:06:56. > :07:01.you will have capital spending projects and spend three points
:07:01. > :07:05.three billion pounds. That is a product of the Barnett formula. We
:07:05. > :07:11.are getting to facilities, financial transactions which we will have to
:07:11. > :07:15.pay back, borrowing facilities which we will have to pay back, but the
:07:15. > :07:22.traditional core capital budget is remaining flat at a much reduced
:07:22. > :07:28.level and a level that is 25% lower than it was in 2010, 2011. In
:07:28. > :07:33.Scotland, we are delivering better economic news. We have rising
:07:33. > :07:36.employment and falling unemployment. The economic developments and
:07:36. > :07:42.positive pieces of economic news in the United Kingdom have emanated
:07:42. > :07:44.from the you -- the economic performance of Scotland. We have
:07:44. > :07:49.taken a different economic approach than the Chancellor of the
:07:49. > :07:54.Exchequer. What we are concerned about is the good investments that
:07:54. > :07:58.we have been making will be thwarted in the actions of the UK government
:07:58. > :08:01.who are determined to inflict more austerity on the people of Scotland.
:08:01. > :08:07.The Chancellor hopes to end the automatic pay increases for public
:08:07. > :08:10.sector workers. That will applied to the UK public sector workers based
:08:10. > :08:13.in Scotland. What about public sector workers when it comes to the
:08:13. > :08:20.Scottish Government, the ones you control, such as the NHS and the
:08:20. > :08:24.police? Do you foresee an end to automatic pay rises for them?
:08:24. > :08:28.Scottish Government takes all its decisions overpay seriously. The
:08:28. > :08:32.government will consider all of the issues about public sector pay
:08:32. > :08:37.policy as we do within the context of the resources we have available.
:08:37. > :08:43.One of the most important thing is I think has to be remembered at this
:08:43. > :08:46.time, is as we try to reform public services, to adjust public services
:08:46. > :08:51.to the changing financial landscape, we have got to make sure we take the
:08:51. > :08:55.workforce with us. That is the spirit that the Scottish Government
:08:55. > :08:58.will take forward as we address these issues and address the further
:08:58. > :09:04.reductions in our budget that we face. Forgive me for
:09:04. > :09:09.interrupting... We must have a responsible pay policy that we can
:09:09. > :09:15.afford. If you want to take public sector workers with you it sounds
:09:15. > :09:18.like you will not be implementing this procedure. As I said, we will
:09:18. > :09:23.resolve the pay issues when it comes to the setting of the budget in
:09:23. > :09:27.September. I think anyone that wants to take forward a serious programme
:09:27. > :09:33.of public sector reform, which the Scottish Government is currently
:09:33. > :09:38.doing, must recognise that they must take the workforce with them. We
:09:38. > :09:43.will be mindful of that. Tough new rules when it comes to job-seekers?
:09:43. > :09:49.You must wait seven days before you can claim and you must learn how to
:09:49. > :09:52.speak English. What is your reaction? These are indicative of
:09:52. > :09:59.the approach that has been taken on the wider welfare agenda within the
:09:59. > :10:04.UK government. One of the problems in the UK is that they must satisfy
:10:05. > :10:08.themselves to reduce budgets at the UK level but they move the Scottish
:10:08. > :10:12.Government -- the problems onto the Scottish Government under local
:10:12. > :10:17.authority partners. We are dedicated to giving people the support they
:10:17. > :10:21.require, because by getting them into employment, we can create
:10:21. > :10:24.economic opportunities and growth that lead to long-term economic
:10:24. > :10:33.sustainability and that is how we tackle the issues in our public
:10:33. > :10:37.finances. Thank you. We will recapture some of the main
:10:37. > :10:41.point is that the Chancellor outlined. There are cuts of 11.5
:10:41. > :10:45.early in pounds and some departments are protected including schools and
:10:45. > :10:49.health and overseas aid. That will have a knock-on effect on the money
:10:49. > :10:53.allocated to Scotland. The Chancellor got to his feet over two
:10:53. > :10:57.hours ago and started by detailing why the government is carrying out
:10:57. > :11:03.this policy. We act on behalf of everyone who knows that Britain must
:11:03. > :11:07.live within its means. We have applied three principles to the
:11:07. > :11:13.spending round I set out today. Reformed to get more from every
:11:13. > :11:17.pound we spend, growth to get Britain the education, enterprise
:11:17. > :11:23.and economic infrastructure it needs to win the global race and
:11:23. > :11:30.fairness, making sure we are all in it together, by ensuring those with
:11:30. > :11:32.the broadest shoulders the largest burdens. We must make sure the
:11:32. > :11:38.unfairness of the something for nothing culture in our welfare
:11:38. > :11:46.system is changed. We are reforming pay in the public sector and holding
:11:46. > :11:50.down pay awards. Public sector pay rises will be limited to an average
:11:50. > :11:55.about two 1% for 2015, 2016. The biggest reform we make on page is to
:11:55. > :12:02.automatic regression paid. This is the practice were many employees not
:12:02. > :12:06.only get a pay rise every year, but also automatically move up a pay
:12:06. > :12:12.grade every single year, regardless of performance. Some public sector
:12:12. > :12:16.employees see annual pay rises of 7%. Progression pay can best be
:12:16. > :12:21.described as antiquated. At worst it is deeply unfair to other parts of
:12:22. > :12:26.the public sector who do not get it. The private sector must pay for it
:12:26. > :12:31.so we will end automatic regression pay in the civil service by 2015,
:12:31. > :12:37.2016. Because we have prioritised health and schools in England, this
:12:37. > :12:40.leads through the Barnett formula to require resource savings of around
:12:40. > :12:45.2% in Scotland, Wales and Northern Ireland. The Scottish resource
:12:45. > :12:50.budget will be set at 25 points �7 billion in Scotland will benefit
:12:50. > :12:54.from new capital borrowing powers of almost �300 million. Being part of
:12:54. > :13:00.the United Kingdom means Scotland will see its capital spending power
:13:00. > :13:05.increase by almost 13% in real terms in 2015, 2016. It is for the
:13:05. > :13:13.Scottish Parliament to decide how best to use it, that is devolution
:13:14. > :13:18.within a United Kingdom, delivering the results. Separately we will make
:13:18. > :13:22.10% savings to the Scotland, Wales and Northern Ireland offices. We
:13:22. > :13:27.will introduce a welfare cap to control the costs of the welfare
:13:27. > :13:32.bill. We will cap the system as a whole. Under the system we
:13:32. > :13:38.inherited, welfare was put into a category called annually managed
:13:39. > :13:45.expenditure, but it was not managed at all. It increased by a staggering
:13:45. > :13:52.50% even before the crash. Our welfare cap. That happening again.
:13:52. > :13:57.The cap will be set each year of the budget for four years. It will
:13:57. > :14:01.reflect forecast inflation, but it will be set in cash terms. In
:14:01. > :14:08.future, when a government looks to reach the cap because it is failing
:14:08. > :14:16.to control welfare, the OBE are will issue a warning and the government
:14:16. > :14:24.will be forced to take action and explain that to Parliament. A small
:14:24. > :14:30.number of the most psychical benefits will be preserved --
:14:31. > :14:40.cyclical. Pensioner benefits will all be included, but the state
:14:41. > :14:41.
:14:41. > :14:45.pension will not be. I have representations that we should
:14:45. > :14:49.include the basic state pension in the welfare cap. That would mean
:14:49. > :14:54.that a future government can offset a rise in working age benefits by
:14:54. > :14:59.cutting the pensions of older people. That penalises people who
:14:59. > :15:04.worked hard all their lives, cutting pensions to pay for working age
:15:04. > :15:08.benefits is a choice this government is certainly not prepared to make.
:15:08. > :15:16.It is unfair, we won't do it and we rejected those representations
:15:16. > :15:20.completely. Half of all job-seekers need more help looking for work, so
:15:20. > :15:27.we will require them to come to the job centre every week rather than
:15:27. > :15:32.once a fortnight. We will give people more time with job centre
:15:32. > :15:36.advisers and proper progress reviews every three months, and we are going
:15:36. > :15:41.to introduce a new seven-day wait before people can claim their
:15:41. > :15:47.benefits. Those first few days should be spent looking for work,
:15:47. > :15:50.not looking to sign on. We do these things because we know they help
:15:50. > :15:58.people stay off benefits and help those on benefits get back into work
:15:58. > :16:03.faster. And here is a further change: From now on if claimants do
:16:03. > :16:08.not speak English they will have to attend language courses until they
:16:08. > :16:11.do. This is a reasonable requirement in this country. It will help people
:16:11. > :16:17.to find work, but if you are not prepared to learn English your
:16:17. > :16:23.benefits will be cut. Taken together, this new contract with
:16:23. > :16:27.people on benefits will save over �350 million each year and all that
:16:27. > :16:34.money will enable us to afford extra support to help people get into
:16:35. > :16:39.work. Helped to work, incentives to work and an expectation that people
:16:39. > :16:44.should do everything they can to find work. That is there for people
:16:44. > :16:49.out of work and it is fair for people in work who pay for them. The
:16:49. > :16:54.decisions we take today are not easy and these are difficult times, but
:16:54. > :16:59.with this statement we make more progress towards an economy that
:16:59. > :17:08.prospers, a state we can afford, a deficit coming down and a Briton on
:17:08. > :17:12.the rise and I commend this economic plan to the country. -- Britain.
:17:12. > :17:17.We will have more analysis right here, but first let's pick up on the
:17:17. > :17:22.interview with John Swinney we just had. He was not saying he would
:17:22. > :17:27.commit to ending the automatic pay increase. It sounded like he wasn't
:17:27. > :17:32.going to do it, at maybe that was just him. Young Mike it wasn't in
:17:32. > :17:38.keeping with every other -- It wasn't in keeping with every other
:17:38. > :17:43.challenge we have had. Generally they said we don't want to do this,
:17:43. > :17:49.sometimes we have to, or we will protect you from the nutty things
:17:49. > :17:55.happening in London. He is still not being clear. I wouldn't wish to
:17:55. > :18:05.guess which way he is going to jump in September. This wouldn't apply
:18:05. > :18:10.for UK reserved power workers, for example in the DWP and MoD. If it
:18:10. > :18:16.applies also to the devolved powers, the NHS, police and local
:18:16. > :18:21.government, they are separately negotiated, we would probably get a
:18:21. > :18:27.signal in the draft budget from John Swinney in September. He is trying
:18:27. > :18:31.to balance being affordable and responsible. Affordable is getting
:18:31. > :18:35.very tight at the moment. At the same time, he doesn't want a fight
:18:36. > :18:40.with the public sector unions. George Osborne has more appetite for
:18:40. > :18:47.a bit of aggression in dealing with the public sector unions. The other
:18:47. > :18:55.area we touched on what the spending on capital projects. �3.3 billion
:18:56. > :19:01.for 2015/16. Mr Swinney was very critical. He is going to have to
:19:01. > :19:04.borrow a bit of it anyway. He will be more reluctant to commit to
:19:04. > :19:10.borrowing because that will add to his longer term problems about
:19:10. > :19:17.fiscal credibility, whether to be an independent Scottish government. I
:19:17. > :19:21.think both sides have a problem. Thank you very much. Let's just get
:19:21. > :19:24.some political reaction to the Spending Review at Holyrood. I am
:19:24. > :19:32.joined by the leader of the Scottish Liberal Democrats Willie Rennie,
:19:32. > :19:35.Kevin McIntosh and Conservative spokesperson Simon Brown. I know you
:19:35. > :19:43.are joining us before the division bell goes, you are voting this
:19:43. > :19:51.afternoon. Let's get some Scottish Labour reaction to this. The
:19:52. > :19:55.Chancellor Berry critical of the Labour left. -- very critical.
:19:55. > :20:00.quite unbelievable. It is a disaster for Scotland and the rest of the
:20:00. > :20:03.UK. This is the same approach the Chancellor took five years ago. He
:20:03. > :20:08.said the problems caused by the deficit when it was caused by
:20:08. > :20:16.demand. He said that by increasing public spending that would Frink the
:20:16. > :20:19.deficit and grow the economy. -- shrink. The economy hasn't grown and
:20:19. > :20:24.unlike every other country in the Western world we are still stuck in
:20:24. > :20:29.recession. Instead of changing his policy he is doing the same thing
:20:29. > :20:35.all over again and he says that austerity is going to work. I don't
:20:35. > :20:40.know what has to go wrong for the Chancellor to rethink his approach.
:20:40. > :20:45.George Osborne has not shrunk the deficit. The economy is not
:20:45. > :20:51.growing. What is the problem? to disappoint Kevin McIntosh but he
:20:51. > :20:59.has trumped the deficit. It was 11% when he took office, it is now the
:20:59. > :21:06.tween seven and 8%. He has succeeded -- between seven and 8%. The growth
:21:06. > :21:11.is disappointing but unemployment is far lower than was predicted. He is
:21:11. > :21:18.getting the basics right but it is taking longer than predicted, and
:21:18. > :21:21.that is disappointing. He has cut the deficit by one third. Willie
:21:21. > :21:25.Rennie, the Democrats are all in this together with the
:21:26. > :21:34.Conservatives. We heard from Vince Cable holding out from cuts to his
:21:34. > :21:38.department. Then he caved in and accepted the cuts. Are you taking on
:21:38. > :21:47.Ken Macintosh's criticisms that George Osborne's policies are not
:21:47. > :21:50.working? The independent commentators see that the economy is
:21:50. > :21:56.recovering. It isn't me that is saying that, it is independent
:21:57. > :22:01.commentators. The deficit is coming down. This is Spending Review in
:22:01. > :22:05.that context is not significant. It is a small amount in comparison to
:22:06. > :22:12.the big achievements that have been made in recent months. We are not
:22:12. > :22:19.complacent, there is more to do, but Ken should be a bit cheery about the
:22:19. > :22:24.gains that have been made because things are getting better. All your
:22:24. > :22:31.colleagues are going up the steps to vote, we will let you go up there as
:22:31. > :22:37.well. Thank you very much. At the heart of it is our political
:22:37. > :22:44.correspondent, who has been standing by. Thank you for joining me. George
:22:44. > :22:51.Osborne, a 50 minute long speech. How do you think this will go down
:22:51. > :22:54.at Minster with the backbenchers and also the Labour Party? I think the
:22:54. > :23:03.Tory backbenchers will be very pleased. Labour will find things to
:23:03. > :23:09.criticise. Essentially it is a carrot and stick policy. There will
:23:09. > :23:17.be �11.5 billion of spending cuts in the financial year 2015/16. Why is
:23:17. > :23:20.that unimportant? Well, the financial year 2015/16 starts in
:23:20. > :23:27.April 2015 and that will be the last year of the present Parliament. The
:23:27. > :23:33.future cuts will take place in the first year of the new parliament.
:23:33. > :23:39.Many in Parliament agree the austerity programme will continue
:23:39. > :23:45.past 2015. The government that takes power will have to make more cuts
:23:45. > :23:50.along the line and those may be quite deep cuts. We may get to the
:23:50. > :23:55.point when the Chancellor feels they can no longer do it with spending
:23:55. > :24:01.cuts and there may be tax increases coming in along the line as well.
:24:01. > :24:09.That is all for the future. The stick apart, as most people were
:24:09. > :24:11.expecting, we won't welcome it. The carrot part is more money for
:24:11. > :24:17.infrastructure spending. For Scotland a large part of that will
:24:17. > :24:21.be seeing, we will give you the power to borrow extra money. You
:24:21. > :24:26.want these capital projects, you go out and get the money, you finance
:24:26. > :24:33.them, you do what you say you've been wanting to do. Now you have the
:24:33. > :24:39.power. This is for 2015/16. Who knows who could be in government
:24:39. > :24:44.then. It is interesting he has decided to have this now. Perhaps he
:24:44. > :24:53.is setting a time bomb for whoever is at number ten down the line. Ed
:24:53. > :25:03.Balls is having none of it. He made a Jeffrey, George and bungled
:25:03. > :25:04.
:25:04. > :25:09.joint, referring to the characters in Rainbow. -- joke. I don't think
:25:10. > :25:16.it is a state secret if I told you that Ed Balls and George Osborne are
:25:16. > :25:26.hardly bosom buddies. They speak out against each other every time the
:25:26. > :25:27.
:25:27. > :25:32.meat in Parliament. -- they meet. It is only for one year, 2015/16. He
:25:32. > :25:36.didn't have to hold a Spending Review, he could have done it next
:25:36. > :25:41.year, but what he is trying to do by invoking what the government will
:25:41. > :25:51.spend in that year 2015/16, he is laying out the rabbit is
:25:51. > :25:53.
:25:53. > :26:01.economically for the next election. -- programme that is -- parameters.
:26:01. > :26:07.If you are going to be bound by these parameters, this week will be
:26:07. > :26:11.pivotal in moving towards the general election. We are to years
:26:11. > :26:15.away from the general election but already we are starting to see the
:26:15. > :26:20.ground being laid for that. We will be back with you shortly, thank you
:26:20. > :26:26.very much. The leader of the opposition has a
:26:26. > :26:33.right of reply, but at the Spending Review it is the Shadow Chancellor
:26:33. > :26:40.Ed Balls. He spoke for 50 minutes but not once did he mention the
:26:40. > :26:47.reason for this Spending Review. His comprehensive failure on living
:26:47. > :26:54.standards and the deficit. Prices rising faster than wages, families
:26:54. > :27:01.worse off, long-term unemployment up, welfare spending soaring, the
:27:01. > :27:11.economy flatlining, the slowest recovery for over 100 years. The
:27:11. > :27:11.
:27:11. > :27:17.budget boasts, but borrowing went up, not down. He did not balance the
:27:17. > :27:22.books, a deficit of �96 billion. More borrowing to pay for his
:27:22. > :27:28.economic failure. That is why this Chancellor has been forced to come
:27:29. > :27:33.to the house today to make more cuts to our public services. Mr Speaker,
:27:33. > :27:39.that we ask the Chancellor. Does he recall what he said to this house
:27:39. > :27:45.two years ago? He said, we have already asked the British people for
:27:45. > :27:51.what is needed and we do not need to ask for more. We do not need to ask
:27:51. > :28:01.for more. Isn't his economic failure the reason why he is back here
:28:01. > :28:02.
:28:02. > :28:04.asking for more today? More cuts to the police, more cuts to local
:28:05. > :28:08.services, this out of touch Chancellor has failed on living
:28:08. > :28:14.standards, growth and the deficit and families and businesses are
:28:14. > :28:19.paying the price for his failure. Of course, Mr Speaker, it wasn't
:28:19. > :28:24.supposed to turn out like this. Let me ask the Chancellor of the
:28:24. > :28:30.Exchequer, does he remember what he told the House three years ago in
:28:30. > :28:37.his first budget and Spending Review? He said, the economy would
:28:37. > :28:43.grow by 6%. It has grown by just 1%. He pledged to get the banks lending,
:28:43. > :28:50.but bank lending is down month on month. He failed the number one test
:28:50. > :28:56.of his economic credibility, heaping the triple-A credit rating. --
:28:56. > :29:01.keeping the triple-A credit rating. He promised living standards would
:29:01. > :29:08.rise but they are falling year on year. He said we are all in this
:29:08. > :29:11.together but then he gave a huge tax cut to millionaires, Mr Speaker. He
:29:11. > :29:19.promised to balance the books and that promise is in tatters. Failed
:29:19. > :29:29.tests, broken promises, his friends call him George. The President calls
:29:29. > :29:32.
:29:32. > :29:39.on Jeffrey. To everyone else, he is just Bungle! That was the comment
:29:39. > :29:44.from Ed Balls. The criticism of the Chancellor has been if you look at
:29:44. > :29:48.many of his comments on social media, is that they want to cut
:29:48. > :29:54.capital spending in 2010, that was one of their efficiency savings. Now
:29:54. > :30:02.in 2013, we are looking at 2015, 2016 when the capital budgets are
:30:02. > :30:09.going up. He wanted a quick hit as governments always do. They took one
:30:09. > :30:14.quarter out of the capital budget. As John Swinney said, governments
:30:15. > :30:24.are bad at delivering infrastructure. Ed Miliband was
:30:25. > :30:28.
:30:28. > :30:34.having fun today. In areas like school building and housing, large
:30:34. > :30:43.numbers of project announced to years ago. He has delivered a
:30:43. > :30:49.fraction of these. In Scotland we have had a lot of talk about
:30:49. > :30:58.infrastructure. It has taken a long time to get into a rhythm and
:30:58. > :31:03.producing new programmes for school buildings and so forth. The idea
:31:03. > :31:08.that it all has an impact, and it makes things different and we
:31:08. > :31:15.recover growth -- growth because we build things, the rhetoric is one
:31:15. > :31:21.thing, the reality and delivering something else. Is George Osborne
:31:21. > :31:28.secretly pursuing a different course of action? He is trying to put more
:31:28. > :31:31.money into capital spending. As we have seen, the boosting of Scotland
:31:31. > :31:37.is as a result of the Scottish Government getting powers to borrow.
:31:37. > :31:43.South of the border, he has got to show that he can deliver on this. It
:31:43. > :31:48.is not happening. It is not now, it is in two years time. Thank you very
:31:48. > :31:55.much. The spending review was preceded by Prime Minister's
:31:56. > :32:02.Questions. As Alf was pointing out, as Ed Miliband and David Cameron
:32:02. > :32:05.clashed, they talked about infrastructure projects. He said he
:32:05. > :32:13.wanted to bring forward every single infrastructure project in the
:32:13. > :32:19.pipeline. Add a 576 project set out, how many have been completed?
:32:19. > :32:26.You cannot build a nuclear power station overnight! They had 13 years
:32:26. > :32:31.and they did not build a single one. Let me give him the figures. There's
:32:31. > :32:35.government is electrifying more than 300 miles of railway track. Perhaps
:32:35. > :32:42.he could tell us how many were electrified under the Labour Party?
:32:42. > :32:47.Nine miles. That is the record. Prime Minister promised to balance
:32:47. > :32:50.the books but rolling was up last year. He said we are all in it
:32:50. > :32:56.together but living standards are falling. He must to get holding
:32:56. > :33:01.Britain, they have not. All you need to know about this Spending Review
:33:01. > :33:11.is that British people are paying the price for their failure.
:33:11. > :33:13.
:33:13. > :33:16.Speaker, let us remember what the Leader of the Opposition said at the
:33:16. > :33:23.time of the last Spending Review. He told us unemployment would go up, it
:33:23. > :33:27.has gone down. He told us crime would go up it has gone down. He
:33:27. > :33:31.told us who are students would not go to university, the percentage has
:33:31. > :33:41.gone up and he told us that the immigration policy would not work
:33:41. > :33:41.
:33:41. > :33:43.but we have cut immigration by one third. That is what we have done.
:33:43. > :33:48.The Prime Minister told the Conservative Party conference that
:33:48. > :33:53.in five years time we will have Alan is the books. That promise will be
:33:53. > :33:57.broken, isn't it Prime Minister? have cut the deficit by one third
:33:57. > :34:01.and we will conduct further by the next election. Frankly, coming to
:34:01. > :34:06.this House and complaining about borrowing when you have got plans to
:34:06. > :34:10.put it up is a pretty odd political strategy. That is the question he
:34:10. > :34:16.must ask his front bench. Why, if borrowing is a problem, is Labour
:34:16. > :34:20.policy to put it up? Last week the Prime Minister said that people on
:34:20. > :34:26.these benches had forgotten about the bedroom tax but I can assure him
:34:26. > :34:36.my constituents have not. In my city last week, only 23 one bedroomed
:34:36. > :34:36.
:34:36. > :34:39.homes were available to rent. Of those, four of them had over 200
:34:39. > :34:45.applicants. When is the Prime Minister going to admit that this is
:34:45. > :34:49.not the best way of reducing the housing benefit will? The point I
:34:49. > :34:53.would make to the honourable lady is that we are removing the spare room
:34:53. > :34:56.subsidy because it is right to be fair to people in private rented
:34:56. > :34:59.accommodation and those in socially rented accommodation at this in the
:35:00. > :35:05.way is the perfect value to the Spending Review we are going to hear
:35:05. > :35:09.about. Labour have told us they will be responsible about spending and
:35:09. > :35:12.they will accept the cuts that have made. We hear constantly, bag
:35:12. > :35:16.venture after backbencher and frontbench after frontbench,
:35:16. > :35:20.complaining about the difficult decisions we have had to take and
:35:20. > :35:24.promised to reverse them. They have no credibility.
:35:24. > :35:33.We stay at Westminster and David Court -- Porter has some company on
:35:33. > :35:38.College Green. The Chancellor has had his say and so has Ed Balls.
:35:38. > :35:44.What do others think? Let's find out. I am joined by three members of
:35:44. > :35:49.Parliament. We have a Conservative, a labourer, and an SNP
:35:50. > :35:56.representative. Good afternoon. However you dress this up, Scotland
:35:56. > :36:02.is facing cuts. This is a good deal for Scotland. We have additional
:36:02. > :36:05.capital funding of �3.3 billion, increased borrowing powers which the
:36:05. > :36:10.Scottish Government has asked for and they have been telling us they
:36:10. > :36:18.have got these projects at the ready. This is the opportunity to
:36:18. > :36:23.get out and buy shovels and yet shovelling! The ground for Scotland
:36:23. > :36:27.is going down? It is not going down in comparison to the level of cuts
:36:27. > :36:34.experienced by other departments. The Scottish budget has been
:36:34. > :36:39.protected by decisions made at Westminster. There will be a real
:36:39. > :36:42.terms cut of only 0.1%. I do not think in the environment we are in
:36:42. > :36:52.and the reality of cuts we are experiencing, that could become
:36:52. > :37:03.
:37:03. > :37:06.claimed about. But obviously the SNP will try and do so. There are cuts
:37:06. > :37:08.but not as bad as England? Chancellor was forced to come to the
:37:08. > :37:11.chamber and admit his fundamental failures. This is an economic
:37:11. > :37:14.crisis. He said... He has failed in all his key tests, there is a crisis
:37:14. > :37:17.in wages and he needs to take the International Monetary Fund advice
:37:17. > :37:22.about stimulating the economy. That is where this government has failed.
:37:22. > :37:27.Let us put this on the record. At the Labour government came in in
:37:27. > :37:32.2015, you would abide by the spending cuts? The government is
:37:32. > :37:39.trying to avoid the issue. We need to borrow now to get the economy
:37:39. > :37:42.moving and get infrastructure building. We are not denying as the
:37:42. > :37:46.SNP sometimes do that you can sometimes forget all of this and
:37:46. > :37:52.there are no difficult challenges. We will always be honest about this
:37:52. > :37:56.but we cannot take try of the ball and we need action now. The UK
:37:56. > :38:02.coalition government says it will give you the power to borrow more.
:38:02. > :38:06.Get those shovels and get them working! We have just come off the
:38:06. > :38:13.back of the last Spending Review which is a 25% cut in capital
:38:13. > :38:17.spending and a 6-point fight card in revenue spending. We have a further
:38:17. > :38:21.cut in revenue spending. In terms of the additional money, such as it is,
:38:21. > :38:28.in capital, that is additional arrowing which is currently agreed
:38:28. > :38:34.and it said that all the money announced at the budget... What we
:38:34. > :38:39.needed from the Chancellor, across the UK, was our proper stimulus to
:38:39. > :38:45.the economy to kick-start it and get it going, but he failed. He has
:38:45. > :38:50.failed to learn the lessons of his own mistakes. He has failed and what
:38:50. > :38:53.we got today will fail again. power comes responsibility. You have
:38:53. > :39:01.the power to borrow. The UK government and I suspect the Labour
:39:01. > :39:11.Party, will say could your financial mouth were you want it and go
:39:11. > :39:13.
:39:13. > :39:17.forward and bring these projects. must deliver projects, but this is
:39:17. > :39:22.not about capital spending in Scotland, it is about all of the UK.
:39:22. > :39:26.We have had massive posterity for the past three years. He said the
:39:26. > :39:36.pace will continue until 2018 and this was the yacht -- parole policy
:39:36. > :39:39.
:39:39. > :39:43.prescription. He needs to practice what he preaches. For example, we
:39:43. > :39:51.have had a fall in house building completions. The housing budget has
:39:51. > :39:59.been cut. Economic experts will tell you you must build houses to get the
:39:59. > :40:06.economy moving. The SNP has led the Scottish people down very badly.
:40:06. > :40:09.This is typical Labour. You let the Conservative Party offer. The SNP
:40:09. > :40:11.are failing badly in Scotland because they are doing for the
:40:11. > :40:21.Conservative Party is doing across the rest of Britain. They are not
:40:21. > :40:22.
:40:22. > :40:29.investing. These two guys sometimes look the same to me! I am not
:40:29. > :40:33.advocating more borrowing and more spending or debt. The prescription
:40:33. > :40:39.market this was the prescription that got us into this. Labour caused
:40:39. > :40:44.problems to the economy. If they address that, perhaps they could
:40:44. > :40:47.have some credibility on this issue. The economy is failing because of
:40:47. > :40:52.the state that you left it in and now we have no clarity on what you
:40:52. > :40:57.want to do about it. One day your leader announces that he is going to
:40:57. > :41:03.be tough on borrowing, the next day Ed Balls, who just seems to be able
:41:03. > :41:07.to say and do what he wants, announces something else. It is
:41:08. > :41:13.likely that whoever wins the next general election, there will be more
:41:13. > :41:17.pain to come, isn't there? We are in a difficult global environment to
:41:17. > :41:24.try and transform what is happening. We have issues and instability in
:41:24. > :41:27.the Eurozone. There are issues in China and in the Far East as well.
:41:27. > :41:32.We are going to be in a difficult situation and we are not ignoring
:41:32. > :41:36.that. What we have made clear to people across the United Kingdom is
:41:36. > :41:42.what we are going to do. It will now be for a Labour and other political
:41:42. > :41:46.parties to set out what they will do. In terms of Scotland, what the
:41:46. > :41:54.Scottish National Party and the Scottish Government needs to do,
:41:54. > :41:59.they need to get on with the projects that they said were ready.
:41:59. > :42:04.Looking ahead to 2015 and whoever wins the general election, they have
:42:04. > :42:11.lots and stark choices to make. There is no doubt it will be
:42:11. > :42:14.difficult. We need a different prescription of the way forward for
:42:14. > :42:20.all the people across the United Kingdom. But do not let that divert
:42:20. > :42:24.you from the need to take action now. This government must produce a
:42:24. > :42:29.viable economic plan. It needs to stimulate the economy, and cutting
:42:29. > :42:34.your way through everything is not the answer. We do recognise there
:42:34. > :42:40.will be real difficulties with spending. The best way to spend that
:42:40. > :42:45.is by growth. That must be faced. Whatever happens with the Scottish
:42:45. > :42:49.referendum next year has -- as far as Westminster is concerned, 2015
:42:49. > :42:57.general election, whoever gets here must give the UK some nasty
:42:57. > :43:02.medicine? Not necessarily. The last Labour government and this
:43:02. > :43:05.Conservative government had fundamentally the same plant, a
:43:05. > :43:13.deficit consolidation strategy over a fixed timescale that did not leave
:43:13. > :43:18.room to manoeuvre. There have been extenuating external factors such as
:43:18. > :43:23.Greece. Whoever wins the next election must reset the entire
:43:23. > :43:27.strategy. They must have a long-term strategy. I hope this is the last
:43:27. > :43:37.Westminster Spending Review Scotland has to supper. We will leave it
:43:37. > :43:39.
:43:39. > :43:44.there. Thank you Albury much. -- thank you all very much. Thank you
:43:44. > :43:50.very much for that. Our political editor Brian Taylor has been
:43:50. > :43:57.crunching through the figures as well. Let's get his analysis. We
:43:57. > :44:01.were just hearing David say that Scotland's budget is being protected
:44:01. > :44:09.in comparison to some of the other budgets that are facing cuts of 10%,
:44:09. > :44:16.but there is still a cut of 2%. relative terms by comparison with
:44:16. > :44:20.some individual Whitehall cuts, 2% is less than that. You must regard
:44:20. > :44:27.the Scottish position in two ways. Scotland is affected by the overall
:44:27. > :44:37.UK changes, particularly those changes in welfare. Then you have
:44:37. > :44:43.the secondary element, the cuts to the direct Scottish budget. In
:44:43. > :44:49.England health and schools are relatively protected and they are
:44:49. > :44:55.large part of the Scottish budget, they are protected. John Swinney
:44:55. > :45:03.says it is a relative standstill comparatively. The money that is
:45:03. > :45:13.available, he says, is borrowing that will need to be paid back. This
:45:13. > :45:16.
:45:16. > :45:22.is the advantage and Scotland should take the opportunity. The issue of
:45:22. > :45:28.pay, public sector pay is an issue. This is a large part of the
:45:28. > :45:32.Chancellor's strategy for stopping these automatic progressions
:45:32. > :45:36.year-on-year. John Swinney must decide whether he will replicate
:45:36. > :45:41.that or find some squeeze out of his existing budget to make it look a
:45:41. > :45:46.bit better. My guess is he will try to make it look better for Scottish
:45:46. > :45:53.public sector workers. Why? Because it fits with his general strategy
:45:53. > :45:58.and because of the matter of the referendum next year. There was a
:45:58. > :46:05.hint that we were getting here, no commitment but a hint. You mention
:46:05. > :46:12.the referendum. How does this play politically, because this is for
:46:12. > :46:19.2015/16 and there is the Scottish Parliament are action -- election in
:46:19. > :46:26.2016. People will be feeling disquieted by September 2014,
:46:26. > :46:33.dealing anxious about the economy. Will stop make them -- will that
:46:33. > :46:42.make them less likely to vote for change or will they look at it as an
:46:42. > :46:47.opportunity for Scotland to move out from under the wing of Westminster.
:46:47. > :46:51.I think this issue of blame or responsibility rather than blame
:46:51. > :46:56.will be a critical factor in the referendum. People attach
:46:56. > :47:03.responsibility and thus the blame to either the Scottish Government or
:47:03. > :47:07.Westminster, and that will be key. The Secretary of State for Scotland,
:47:07. > :47:15.Michael Moore, has been making 10% cuts to his own department. David
:47:15. > :47:19.Porter has been speaking to him. Chancellor has now sat down and MPs
:47:19. > :47:24.are getting a chance to distil what's the Spending Review means for
:47:24. > :47:27.them. What does it mean for Scotland? Thank you for joining us,
:47:27. > :47:35.Michael Moore. It is a simple question, what does this mean for
:47:35. > :47:41.Scotland? We get a huge increase in the capital budget for Scotland, a
:47:41. > :47:46.13% increase, which is great news for investing in Scottish capital
:47:46. > :47:51.projects and infrastructure. Here we are delivering for them. The
:47:51. > :47:56.Scottish budget is generally protected because a decision has
:47:56. > :48:04.been taken at a UK level to protect health and schools. It is a very
:48:04. > :48:13.difficult economic background, here we are making long-term decisions.
:48:13. > :48:16.Extra spending on investment, in financial terms what will it be?
:48:16. > :48:23.will be �296 million of new borrowing powers introduced by last
:48:23. > :48:29.year's Scotland Act. That gives the Scottish Government huge freedom to
:48:29. > :48:35.invest in schools and infrastructure, very important for
:48:35. > :48:38.us at this critical time. This is against the backdrop of the
:48:38. > :48:43.continuing challenges of the international economy, but we are
:48:43. > :48:47.confident that we are now in the recovery phase. We are taking the
:48:47. > :48:51.right decisions for the Scottish economy. This is not extra money
:48:51. > :48:58.coming from Whitehall, this is the ability for the Scottish Government
:48:58. > :49:02.to borrow that money. There will be a mixture of capital and consented
:49:02. > :49:07.purchase, something that we battled long and hard about to deliver in
:49:07. > :49:16.the Scotland Act. In effect you are bringing those borrowing powers
:49:16. > :49:22.forward. You are not giving Scotland extra money for infrastructure.
:49:22. > :49:28.are giving significant new powers, 2.2 billion in total, four capital
:49:28. > :49:34.borrowing in Scotland. That is a major breakthrough. It is not to be
:49:34. > :49:39.sniffed at. It is exactly the kind of freedoms that Scottish agitators
:49:39. > :49:48.have been calling for. This will get the Scottish economy on the right
:49:48. > :49:56.track. It is been a challenging few years. Let's deal with the stick.
:49:56. > :50:01.There will be a reduction, I'll be at a smaller one than in England, --
:50:01. > :50:05.albeit a smaller one than in England. You only have to look at
:50:05. > :50:10.Europe to see what is happening in the Eurozone, there are still major
:50:10. > :50:15.challenges. People haven't forgotten the legacy we were left with by the
:50:15. > :50:23.last Labour government, so we have to continue making tough choices but
:50:23. > :50:27.we believe in prioritising the way we have and making the right
:50:27. > :50:34.decisions for Scotland. It is worth saying that this settlement is only
:50:34. > :50:40.for a year. After the next general election there will have to be
:50:40. > :50:50.further decisions, weren't there? The recovery has been longer than
:50:50. > :50:51.
:50:51. > :50:59.we'd hoped because of the international economy, but we are
:50:59. > :51:03.prioritising international investment -- infrastructure
:51:03. > :51:09.investment and tax reform. That is very important for us to continue to
:51:09. > :51:17.deliver and something that I am particularly proud of. Is it a case
:51:17. > :51:23.of pain deferred, not pain reduced altogether? What we are doing is
:51:23. > :51:27.taking responsible steps to move from the recovery phase... From the
:51:28. > :51:36.rescue phase to the recovery phase. Today's spending round supports
:51:36. > :51:44.that. The acid test for Scotland is if we are having this conversation
:51:44. > :51:49.in a year's time, will more people be in work and will those capital
:51:49. > :51:55.projects, the borrowing you are allowing, be up and running?
:51:55. > :52:03.Scottish Government say they have projects ready to go, we want to see
:52:03. > :52:07.those projects happen, but we are seen over the past three years over
:52:07. > :52:13.350,000 jobs created in the private sector, we want to reduce
:52:13. > :52:18.unemployment, we are not complacent and we want to make sure the economy
:52:18. > :52:22.continues on the right road. As far as these capital projects are
:52:22. > :52:26.concerned, is it up to the Scottish Government to decide what projects
:52:26. > :52:32.they choose will Whitehall be saying, we fancy that one, we don't
:52:32. > :52:35.fancy that one? These powers are devolved to the Scottish
:52:35. > :52:41.Government. The Scottish Government will set them for the country as a
:52:41. > :52:49.whole. UK Government will continue to invest across the whole country,
:52:49. > :52:52.whether it is working together on HS2, rural broadband or other
:52:52. > :52:57.initiatives that will be announced tomorrow. Across the UK we are
:52:57. > :53:05.continuing to invest and that is happening in Scotland as well.
:53:05. > :53:10.you for joining me, Andrew, back to you.
:53:10. > :53:15.A final word with this afternoon's commentator, Alf Young. What is the
:53:15. > :53:19.strategy behind this are Spending Review? What is the Chancellor up
:53:19. > :53:24.to? Is he trying to show he is responsible and credible, trying to
:53:24. > :53:29.put Labour in an awkward position? The core strategy is political
:53:29. > :53:35.positioning. This could have been done next year, but he is setting
:53:35. > :53:40.the scene. He is setting up some big points that he hopes he can go to
:53:40. > :53:45.labour into saying, we will do that as well. Some of the stuff about pay
:53:45. > :53:51.reform and welfare reform, he knows there is a constituency out there
:53:51. > :53:56.that thinks too many people are on welfare. He will hope to push Labour
:53:56. > :54:06.into that position. Equally, there is a strategy these are the Scotland
:54:06. > :54:08.
:54:08. > :54:17.and the referendum -- vis-a-vis. John Swinney is reluctant about
:54:17. > :54:20.following the Chancellor 's reforms, he is having to say that
:54:20. > :54:26.this wouldn't happen if we were independent, but a lot of countries
:54:26. > :54:32.in the world are looking for growth and not finding it. The central
:54:32. > :54:35.issue is that question of growth and demand in the economy. If another
:54:35. > :54:40.144,000 people are leaving the public sector, if there is not going
:54:40. > :54:46.to be progression pay for these areas of the public sector, if pay
:54:46. > :54:49.itself is going to be continually capped right through to 2016, people
:54:49. > :54:54.will have less money in their pockets. People on welfare will have
:54:54. > :54:59.less money in their pockets. If they don't have money then they won't be
:54:59. > :55:05.spending, and if demand isn't there then it doesn't matter how many
:55:05. > :55:14.shovels you wield, if you build a bridge here or road there, there
:55:14. > :55:19.won't be any growth. The growth story, the backdrop, people will
:55:19. > :55:25.look at this and ask, where is it coming from? The story of the
:55:25. > :55:31.stimulus is still there to be fought over by one side or the other.
:55:31. > :55:36.Taylor was speaking about the blame game and the SNP -- Brian Taylor was
:55:36. > :55:42.speaking about the blame game, but that can be a risky strategy for the
:55:42. > :55:45.SNP. The SNP Government gets the money and spends it so it doesn't
:55:45. > :55:53.have responsibility for the bigger picture about where the growth is
:55:53. > :55:57.going to come from. They say, if only they had the power to do that,
:55:57. > :56:01.but they are asking if they are really going to get back to the
:56:01. > :56:07.growth we used to know or if there is a new world we are facing where
:56:07. > :56:10.growth is at a low level and not so easily gained. Thank you for your
:56:10. > :56:14.company this afternoon. More from Danny Alexander and the
:56:14. > :56:19.infrastructure programme tomorrow. That is all we have time from and
:56:19. > :56:26.that is indeed ask for this session of Holyrood. We will be back in